Palladium COT Report for the week ending January 30, 2026

Executive summary

This report covers positioning changes in the Palladium futures market as of January 27, 2026. The key development this week was Managed Money flipping to a net short position for the first time in the observed period, driven primarily by significant long liquidation. This selling occurred into a strong price rally, suggesting profit-taking or a belief that the rally was overextended. Commercials remain heavily net short, consistent with producer hedging. Overall market participation, as measured by open interest, continued its recent decline, pointing to reduced conviction among market participants amidst extreme price volatility.

Positioning

• Managed Money (Funds): Flipped from a small net long position to a net short of -543 contracts. This is a significant shift from their net long +80 position two weeks ago and +293 in late December. Their gross long exposure is now 6,182 contracts, while gross shorts stand at 6,725 contracts.
• Producer/Merchant (Commercials): Maintained their significant net short stance at -3,479 contracts (680 long vs. 4,159 short). This is slightly less short than in recent weeks but remains a structurally bearish position, indicative of producer hedging.
• Swap Dealers: Hold a net long position of +639 contracts. This position has decreased substantially from a peak of +2,139 contracts in early January, suggesting they are absorbing less commercial short flow.
• Non-Reportable (Retail): This cohort remains staunchly bullish with a net long position of +2,156 contracts (3,396 long vs. 1,240 short).

Flows and week-over-week changes

• Managed Money: The most significant flow came from this category, which saw a net reduction of 527 contracts. This was driven by longs closing out positions (-372 contracts) rather than aggressive new short selling (-84 contracts).
• Producer/Merchant: This category was very quiet, with a negligible change in their net position. They reduced longs by 60 contracts while adding only 2 short contracts.
• Non-Reportable: Showed a bullish flow, adding 95 long contracts while simultaneously cutting 187 short contracts, reinforcing their net long view.
• Overall Market: Total open interest saw a small decline of -44 contracts, indicating a slight exit from the market.

Commercials vs speculators

The classic market structure of commercially-hedged shorts versus speculative longs persists. However, the speculative side is now fractured. - Commercials (Producers/Merchants) are deeply net short at -3,479 contracts, representing 21.7% of total open interest on the short side. - Speculators as a whole (Managed Money + Non-Reportable) are collectively net long +1,613 contracts. However, the professional money (Managed Money) has turned net short (-543), while the retail/smaller speculators (Non-Reportable) are strongly net long (+2,156). This divergence suggests a growing disagreement on price direction between professional and retail traders.

Open interest and participation

• Open Interest: Total open interest stands at 19,123 contracts. This is the lowest level in the provided data and continues a downtrend from a peak of 22,061 contracts reported on December 23. This decline points to capital leaving the Palladium market.
• Trader Count: The total number of reportable traders is 168, also down from a high of 188 in late December, further supporting the theme of declining participation.
• Concentration: The short side shows notable concentration. The largest 4 traders hold 34.1% of the net short position, and the largest 8 traders hold 47.4%. This indicates that a small number of entities hold a significant portion of the bearish bets.

Price context

The positioning data in this report covers the trading week from Wednesday, January 21, to Tuesday, January 27. - During this period, Palladium prices experienced a strong rally. The front-month contract moved from a close of 1,925.0 on Jan 21 to a peak of 2,042.5 on Jan 26, before closing the reporting period at 1,994.5. - The fact that Managed Money liquidated long positions (-372 contracts) into this strong rally is significant. It indicates they were using market strength to sell and take profits, a move that proved prescient given the extreme price collapse to 1,830.0 later in the week (on Jan 30), which is not captured in this report's positioning data.

Risks and watchpoints

• Managed Money Bearish Tilt: The flip to a net short position by funds is a key development. Watch for signs of either further long liquidation or, more bearishly, aggressive new short selling in next week's report.
• Post-Report Volatility: The price data shows a massive spike to 2,150.0 followed by a collapse to 1,830.0 after the January 27th cutoff for this data. The next report will be crucial to see how participants reacted to this extreme volatility.
• Declining Liquidity: The steady drop in open interest suggests thinning liquidity. This can exacerbate price swings and makes the market more susceptible to sharp moves on news or order flow.
• Retail vs. Professional Divergence: The widening gap between bullish retail traders and the newly bearish institutional funds is a key tension point. A continuation of this trend could signal a market top if the professional money proves correct.